Federal Reserve Bank of Richmond President Jeffrey Lacker, who dissented against additional stimulus at every Fed meeting last year, said financial markets will remain volatile as policy makers debate how and when to curtail the central bank's asset purchases program.

"As market participants gain additional insight from the words of Federal Reserve officials or by policy actions in coming quarters, further asset price volatility seems likely," said Lacker, who doesn't vote on policy this year.

Global stocks and bonds retreated after Fed Chairman Ben S. Bernanke on June 19 outlined the conditions that would prompt the Fed to reduce and eventually end $85 billion in monthly asset purchases. The Yield on the benchmark 10-year Treasury rose as high as 2.66 percent this week, the highest since August 2011.

More purchases are unwarranted because the four-year economic expansion is being limited by structural elements beyond the Fed's control, and continued growth in the balance sheet increases the risks associated with the eventual withdrawal of the stimulus, Lacker said today on a panel discussion in White Sulphur Springs, West Virginia.

"The benefit-cost trade-off for further monetary stimulus does not look promising," Lacker said at a judicial conference held by the U.S. Court of Appeals for the Fourth Circuit. "I seriously doubt additional monetary stimulus can provide much impetus to real growth right now."

Chairman Ben S. Bernanke told reporters last week the Federal Open Market Committee may taper $85 billion in monthly bond buying later this year and halt purchases around mid-2014 as long as the economy performs in line with Fed projections. Officials estimate the jobless rate, which was 7.6 percent in May, will fall to 7.2 percent to 7.3 percent by year-end.

David Fuller's view Jeffrey Lacker's comments are certainly in line with what Fullermoney has been saying for at least several weeks. However, I do think that the Fed needs to keep short-term interest rates low for at least a number of months, and I believe it will.